China seeks to woo restive African states

Business News / 26 March 2013, 08:00am

Bloomberg

David Malingha Doya and Robert Mbakouo Dar es Salaam

Chinese President Xi Jinping will set out plans for mining and infrastructure development on a trip to Africa this week, as China seeks to reassure leaders on the continent who have voiced unease about its trade relations.

During his eight-day trip Xi stops in Tanzania, the Republic of Congo and South Africa, where he will sign business co-operation deals and attend a summit of the Brics nations of Brazil, Russia, India, China and South Africa.

Annual trade between Africa and China has doubled since 2007 to more than $200 billion (R1.85 trillion) and Chinese investment stands at $20bn, according to Standard Bank.

While African nations welcome the investment and the job creation that comes with it, leaders from Botswana’s Ian Khama to Nigerian central bank chief Lamido Sanusi are asking whether the relationship has benefited Africa as much as it has China.

That is a shift in tone after officials welcomed China for taking a different strategy from the West by offering investment without demanding structural adjustments, open markets, democratic reforms or anti-corruption measures.

“There’s a belief that since Africa got a raw deal from the colonial West, then the Chinese must be Africa’s best friend,” George Ayittey, a Ghanaian economist and president of the Free Africa Foundation based in Washington, said.

“But the evidence doesn’t show that, and the main criticism is that they are building infrastructure in exchange for Africa’s resources in deals that are structured to favour China.”

Xi arrived in Tanzania on Sunday. He met President Jakaya Kikwete before the two signed 16 economic co-operation agreements worth as much as $16bn. The country also signed a loan agreement with China Merchants Bank for a planned $10bn port at Bagamoyo on the Tanzanian coast.

Xi will attend a two-day summit of leaders from the Brics countries that begins in Durban today. He arrives in the Republic of Congo on Friday for talks with President Denis Sassou-Nguesso.

Seven of the 10 fastest-growing economies are in sub-Saharan Africa, according to the International Monetary Fund.

That expansion contrasted with subdued growth in mature markets like the US and Europe and was attracting Chinese businesses looking to sell goods to emerging economies, particularly “highly populated and increasingly wealthy” ones in Africa, Standard Bank said in a research note last November.

More than half of China’s imports from Africa last year were coal and oil, with iron ore and copper making up a further 14 percent, Jeremy Stevens, a Beijing-based economist at Standard Bank, said.

Its exports to the continent were mainly manufactured goods such as electrical equipment, machinery, vehicles and clothing, he said.

That has caused some concern among African leaders. Sanusi compared China’s purchase of primary goods and sale of manufactured items to the continent to British colonial policies. He also criticised Chinese investment in African infrastructure that mostly failed to transfer skills to local communities.

“Africa must recognise that China, like the US, Russia, Britain, Brazil and the rest, is in Africa not for African interests but its own,” Sanusi said in an opinion article in the London Financial Times on March 11.

Khama said last month that he was echoing comments voiced privately by other African presidents when he expressed frustration at government dealings with Chinese companies.

Botswana blames China National Electric Equipment for delays in building generators at the Moropule B coal-fired power plant that have resulted in outages

“We

have had some bad experiences with Chinese companies in this country,” Khama told Business Day. That’s a different tone from last year, when Ghana’s then vice-president, John Dramani Mahama, said China had become a “significant source of credit”, while borrowing from the International Monetary Fund and the World Bank was “quite tiresome and comes with a lot of strings”.

China paid for and built the AU’s $200m headquarters in Addis Ababa that was opened last year.

Last July, Xi’s predecessor, Hu Jintao, pledged $20bn in new loans for African infrastructure and manufacturing. Since then, Chinese companies have faced labour disputes in Zambia and Niger, kidnappings in Sudan and Egypt, and the deaths of employees in attacks on projects in Nigeria and Cameroon. – Bloomberg